Value Investing in my Circle of Competence, Hurdle Rate

Hurdle Rate

Value Investing in my Circle of Competence

The name “Hurdle rate” was inspired by none other than Mark Leonard of Constellation Software, and their prolific use of a fixed hurdle (discount) rate for their investments. Had you invested into Constellation Software at the time of their IPO as an Australian Investor you would of seen your investment multiply by >100x or (>35% CAGR), an enviable record (Updated March 2023).

Equity Bottom-Up

Sylogist Ltd. delivers information technology solutions to integrate people, data, and processes across organizations.  The Company's solutions allow fluid information access to both personal computers and mobile devices.  Sylogist provides mobile and integration platforms along with related services to a global customer base.

<ul><li>Sylogist is a public sector software business which provides purpose-built ERP and CRM solutions to over 2,000 clients such as schools, non-government organisations, religious organisations, municipalities, and other government entities. </li><li>Their cloud software is built off the foundation of Microsoft Dynamics 365 Business Central and specifically catered towards the education, government, and donor verticals.</li><li>Historically, Sylogist was run under various management teams who all conducted acquisitions along the way. </li></ul>

Sylogist is a public sector software business which provides purpose-built ERP and CRM solutions to over 2,000 clients such as schools, non-government organisations, religious organisations, municipalities, and other government entities. Their cloud software is built off the foundation of Microsoft Dynamics 365 Business Central and specifically catered towards the education, government, and donor verticals.Historically, Sylogist was run under various management teams who all conducted acquisitions along the way. 

Unifiedpost Group SA provides software solutions. The Company offers cloud-based platform to empower businesses by streamlining, integrating, and automating mission critical business functions - from procuring, e-invoicing and payments processing, working capital financing, and e-identity solutions. Unifiedpost Group serves customers in Belgium.

<ul><li>Continuing the trend of having a noticeable focus on e-invoicing, I can present the Unifiedpost Group (‘UPG’) business.</li><li>UPG founded in 2001 by existing CEO, Hans Leybaert (12% shareholder) and has scaled up over the years to what is now a business with over 1,000 employees operating in over 30 countries.</li><li>Its products are predominately focused on e-invoicing (80% of revenue) with a base subscription revenue in order to access the platform and transactional component on top which allows the group to benefit from volume through a usage-based fee.</li></ul>

Continuing the trend of having a noticeable focus on e-invoicing, I can present the Unifiedpost Group (‘UPG’) business.UPG founded in 2001 by existing CEO, Hans Leybaert (12% shareholder) and has scaled up over the years to what is now a business with over 1,000 employees operating in over 30 countries.Its products are predominately focused on e-invoicing (80% of revenue) with a base subscription revenue in order to access the platform and transactional component on top which allows the group to benefit from volume through a usage-based fee.

COG Financial Services / Equity Bottom-Up

COG Financial Services Limited operates as an investment holding company. The Company invests in finance and leasing companies. COG Financial Services serves customers in Australia.

<ul><li>Following on from my decision to pass on Euroz another company I looked further into was COG Financial Services.</li><li>Unitholders may be well familiar with this already as the second bidder for Diverger, and substantial shareholder of Centrepoint Alliance (Given I invested in both this says something about their capital allocation).</li><li>COG is another financial services business operating predominately in the space of asset finance brokering and lending. </li></ul>

Following on from my decision to pass on Euroz another company I looked further into was COG Financial Services.Unitholders may be well familiar with this already as the second bidder for Diverger, and substantial shareholder of Centrepoint Alliance (Given I invested in both this says something about their capital allocation).COG is another financial services business operating predominately in the space of asset finance brokering and lending. 

WRKR LTD provides software solutions. The Company offers platform for employers to take care of compliance obligations such as onboarding and ongoing verification solutions, which saves money, time, and reduces risk. WRKR serves customers in Australia.

<ul><li>Wrkr is an Australian regulatory software business founded in 2009 which helps employers with the various compliance moments for their employees such as superstream contributions, Single touch payroll (STP), employee onboarding and so on.</li><li>It is a business which predominately offers its solutions through the larger corporates and APRA superannuation funds across millions of employees at a very low average ticket size.</li><li>It is one of just 9 gateway operators on the Superannuation Transaction Network (STN) and one of 9 ESA providers (only 5 including Wrkr can process rollovers and release) in the country.</li></ul>

Wrkr is an Australian regulatory software business founded in 2009 which helps employers with the various compliance moments for their employees such as superstream contributions, Single touch payroll (STP), employee onboarding and so on.It is a business which predominately offers its solutions through the larger corporates and APRA superannuation funds across millions of employees at a very low average ticket size.It is one of just 9 gateway operators on the Superannuation Transaction Network (STN) and one of 9 ESA providers (only 5 including Wrkr can process rollovers and release) in the country.

Macompta.FR provides technology solutions. The Company develops SaaS software to help entrepreneurs in terms of invoicing, accounting, tax declarations, fixed assets, payroll, and expense reports. Macompta.FR serves clients in France.

<ul><li>Macompta is a French accounting software business which just listed in March 2024 on the Euronext Access Paris exchange without a primary oƯering.</li><li>The company is issuing no new shares but listed to allow its employees to sell shares to the public.</li><li>Over the coming months the company is looking to gradually build up to a free float of 10% (8% coming from one shareholder) and to list on the Euronext Growth exchange within 2 years.</li></ul>

Macompta is a French accounting software business which just listed in March 2024 on the Euronext Access Paris exchange without a primary oƯering.The company is issuing no new shares but listed to allow its employees to sell shares to the public.Over the coming months the company is looking to gradually build up to a free float of 10% (8% coming from one shareholder) and to list on the Euronext Growth exchange within 2 years.